When it comes to collecting our money we seem to be stuck between (but accustomed to) two worlds. Most of us understand the effective “new” way, yet seem oddly resigned to employing the "old" way in our own businesses. Let's examine the two.
The old way to collect money looks like this:
Print off an aging statement
Highlight the most troubling accounts
Call the customers
IF they answer, and IF you talk to the person writing the checks, you’re lucky. Most of the time you’ll leave messages and wait for a call back.
You small talk (after all, you don’t want to be rude or lose sales), then awkwardly ask for the money
They typically give you one of these responses: “Check is in the mail” “My customer hasn’t paid me,” transfer blame, sob story “Let me check on something,” give you hope for a quick payment
You hang up and call the next guy on the list.
Repeat process until interrupted
Most of the time, you’ll end this session with no more money than when you started (but can at least hope the mailman brings you some checks you can drive into the bank in a couple days). It’s not surprising that everyone struggles to collect money like this!
Think about this process from the customer’s point of view. He has auto-pay set up with his bank, subscribes to services that automatically bill him monthly, and gets up to the second updates from amazon when his package ships. When he needs to pay his daughter’s school lunch bill, he gets an email with a link to pay. This is the world he lives in, and every time those easy services process, he has less money in his account to pay you.
If you’re not making it just as easy for your customers to pay you, you can expect it to be harder and harder to get yours. What, then, is the ideal system in this industry to optimize cash coming in? Here are 6 critical requirements:
Customers should know what they owe you immediately. Your customers should know their price and have an invoice to pay as soon as they order product from you, not later. If you’re making customers look up an invoice or wonder about a total, you can expect massive delays.